Stock Market update: Vodafone Idea shares up by 11% as govt shows no interest in managing operations

The government articulated that it would prefer the companies to be managed by current promoters. However, it plans to liquidate its role in future.

Shares of popular telecom company Vodaphone Idea saw an increase of 11.44 per cent at Rs 13.15 apiece (+1.35) today on 12 Jan, 12:54 pm IST on the National Stock Exchange (NSE) after the company scrip crashed by 21 per cent yesterday as it closed the day by Rs 11.8.

The stock recuperated today amid analysts remarking that the conversion of dues into equity for the government was a credit positive for investors. This was highly speculated by the analysts, as the government out of the blue purchased 35.8 per cent of the stake in VI.

Vodafone Idea on Tuesday had conveyed it has exercised the option to transform interest payable for the four years of deferment on the deferred spectrum instalments and its altered gross revenue dues into equity that will see the government having a 35.8 per cent stake in the firm post-dilution.

“In all my personal interactions with the government, they have been very clear they do not want to run the company and do not want to take over operations,” Ravinder Takkar, managing director and chief executive officer of Vodafone Idea briefed reporters in a virtual press brief.

The government articulated that it would prefer the companies to be managed by current promoters. However, it plans to liquidate its role in future.

It is estimated that the interest payout for delayed expenses will be about Rs 16,000 crore, which it decided to present as equity. Although telecom has been identified as a strategic sector, resulting in the government frequently bailing out laggards MTNL and BSNL, the centres will get shares in the two private companies at a time it wants to exit several sectors of the economy.

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